Share Exchange Agreement - Wade Cook Financial Corp. and Information Quest Inc.
Share Exchange Agreement
THIS AGREEMENT (the "Agreement" and/or the "Share Exchange") is entered
into on the date signed below ( "Agreement Date") and shall take effect as of
January 1, 1998 ("Effective Date"), between Wade Cook Financial Corporation
("WCFC"), a Nevada corporation, and Information Quest, Inc., a Nevada
corporation ("IQI").
REPRESENTATION
A. WCFC is a corporation organized and existing under the laws of the
State of Nevada.
B. The authorized capital stock of WCFC consists of One Hundred Forty
Million (140,000,000) shares of Common stock, par value $0.01, of which
approximately Sixty One Million Two Thousand Five Hundred Eighty Three
(61,002,583) shares are duly issued and outstanding as of the Agreement Date,
and Five Million shares of preferred stock, par value $10.00, none of which
are issued and outstanding.
C. IQI is a corporation organized and existing under the laws of the
State of Nevada whose Balance Sheets as of December 31, 1997 is attached
hereto as Exhibit B and are complete and accurate.
D. The authorized capital stock of IQI consists of Twenty Four Million
(24,000,000) shares of Common stock, par value $0.001, of which all are
issued and outstanding as of the Agreement Date, and One Million (1,000,000)
shares Preferred stock, par value $0.001, none of which are issued and
outstanding.
E. WCFC and IQI enter into this Agreement whereby WCFC will acquire all
of the issued and outstanding stock of IQI by issuing 45,000 restricted
shares of Common stock of WCFC to the shareholders of IQI in exchange for
50,000 shares of Common stock of IQI. WCFC and IQI intend the exchange to
qualify as a tax-free reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
In consideration of the foregoing recitals, the covenants and conditions
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Share Exchange; Effectiveness
The shareholders of shares of Common Stock of IQI shall exchange all of
their shares for his or her proportionate share of 45,000 newly issued shares
of Common Stock
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of WCFC in accordance with the terms and conditions of this Agreement. Upon
the execution of this Agreement by IQI and WCFC and the receipt by WCFC of
all shares issued in IQI the date for the effectiveness of this Agreement
(the "Effective time of the Share Exchange") shall revert back to January 1,
1998.
2. Exchange of Shares
At the Effective Time of the Share Exchange:
(a) Each shareholder of IQI shall be issued his or her proportionate
share(s) of fully paid and nonassessable common stock of WCFC as stated in
section 1. Each shareholder of IQI shall sign an Investment Letter attached
hereto as Exhibit A pursuant to Rule 144 upon receiving WCFC shares.
(b) All shares of capital stock of IQI that are tendered to WCFC shall
be retained by WCFC and IQI shall become a wholly owned subsidiary of WCFC.
3. Implementation
Each of WCFC and IQI shall take, or cause to be taken, all action or do,
or cause to be done, all things necessary, proper or advisable under the laws
of the State of Nevada to consummate and make effective the Share Exchange.
4. Amendment
This Agreement may, to the extent permitted by law, be amended,
supplemented or interpreted at any time by action taken by the Board of
Directors of both of IQI and WCFC; Provided, however, that this Agreement
may not be amended or supplemented after having been approved by the
shareholders of IQI except by a vote or consent of shareholders in accordance
with applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first set forth above.
INFORMATION QUEST, INC.
By: /s/ Tom Cloward
----------------------------------
Name: Thomas E. Cloward
Its: Secretary and Treasurer
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Page 1 of 2
Page 2
Robert & Meda Hondel
Secured Promissory Note
4th Legal Description: & 7-006 DBLR 85-04-17-0276 THAT POR L 4 S P
83-1-20-0374 IN THE SW OF 17-18-05E NOT TO
BE SOLD OR FURTHER SUBD W/O BALANCE OF
L 4 LOCATED IN SE 18-18-05E OUT OF 7-002
SEG Y-1 264
Parcel No.: 051817-7-005
5th Legal Description: PLAT NAME COUNTRY DIVISION #1 VOLUME 51
PAGES 21-26 L 16 EASE OF RECORD
Parcel No.: 904400-016-0
Address: 8218 266th St. E.
Graham, WA 98338
In the event that the monthly payments provided for in this Note have
not been paid and actually received by Promisee on or within five (5) days of
their due date, a late charge of twenty-five dollars ($25.00) for each
delinquency shall be assessed by Promisee to cover the extra expense involved
in handling delinquent payments. Promisee shall not be obligated to accept
any monthly payment made after its due date, unless that monthly payment
shall be accompanied by the full amount of the late charges assessed by
Promisee as provided in this Note; however, in the event that a late monthly
payment is accepted, that payment shall first be applied to late charges.
Any legal holder of this Note may, without notice and without releasing
the liability of any maker or guarantor of this Note, grant extensions or
renewals of this Note from time to time and for any term or terms. Any legal
holder of this Note shall not be liable for or prejudice by failure to
collect or for lack of diligence in bringing suit on this Note or any renewal
or extension of this Note. Promissor waives presentment for payment, notice
of nonpayment, protest and notice of protest.
Should this Note be placed in the hands of an attorney for collection,
or if action be instituted on it, all parties now or in the future liable for
indebtedness evidenced by this Note, jointly and severally agree to pay all
costs and expenses of the collection or enforcement action with reasonable
attorney fees in addition to the amount found due.
/s/ Robert Hondel /s/ Meda Hondel
------------------------------ --------------------------------
Robert Hondel Meda Hondel
8-8-97 8-8-97
------------------------------ --------------------------------
Date Date
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Employment Agreement
1. Parties:
This Agreement is between Wade Cook Financial Corporation, 14675 Interurban
Avenue South, Seattle, Washington 98168 ("the Company")and Thomas Cloward, a
resident of the State of Washington ("Cloward").
2. Position:
Cloward shall be employed by the Company as President of Information Quest,
Inc.. Cloward shall report directly to the Chief Executive Officer of the
Company.
3. Employment Term:
Cloward shall be employed from April 1, 1998 through December 31, 1998 unless
otherwise mutually agreed.
4. Salary:
For the remainder of 1998, Cloward shall be paid an annual salary of sixty
thousand dollars ($60,000) on a pro rata basis. In the event Company
licenses intellectual property from Cloward, said licenses shall fall outside
the scope of this Agreement. Cloward's salary shall be reviewed and
renegotiated on an annual basis beginning January 1, 1999.
5. Other Compensation:
As a full-time employee, Cloward shall also receive the following benefits:
A: One percent (1%) of Information Quest, Inc.'s net revenues paid
quarterly based on the Company Accounting Department's standard payment
schedule. Net revenues shall be gross revenues less costs for
inventory, shipping, payroll, returned products, and costs to providers
for paging services, pagers, and other services.
B: The option to purchase 45,000 restricted shares of Class A Common Stock
of WADE at $2.00 per share on September 1, 1998 and the option to
purchase 45,000 restricted shares of Class A Common Stock of WADE at
$2.33 per share on
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September 1, 1999. Both options must be exercised within 30 days
following the anniversary date.
C: Two weeks annual vacation leave;
D: Reimbursement of reasonable travel and other business expenses incurred
by Cloward in the performance of his executive duties;
E: Health insurance for Cloward and his family through the Company's customary
provider;
F: Any other benefits provided employees of the Company as outlined in the
current Personnel Handbook or as directed by the CEO;
6. Termination:
This Agreement may be terminated as follows:
A. By Death: the Company shall pay to Cloward's beneficiaries or estate, as
appropriate, the compensation to which he is entitled pursuant to this
Agreement through the end of the month in which the death occurs.
Thereafter, the Company's obligation shall terminate. Nothing in this
Section shall affect any entitlement of Cloward's heirs to the benefits of
any life insurance plan purchased by the Company.
B. By Disability: If, in the opinion of the Board of Directors, Cloward shall
be prevented from properly performing his duties hereunder by reason of any
physical or mental incapacity for a period of more than one hundred and
twenty (120) days in the aggregate or sixty (60) consecutive days in any
twelve-month period (the "Disability Period"), then, to the extent
permitted by law, the Employment Term of this Agreement shall be paid up
through the last day of the month of the Disability Period and thereafter
the obligations hereunder of the Company shall terminate.
C. By the Company for Cause: the Company may terminate, without liability and
without prejudice to any other remedy to which the Company may be entitled
either by law, in equity or under this Agreement, the Employment Term at
any time and without advance notice if:
(1) In the reasonable and good faith opinion of the Board, Cloward acts,
or fails to act, in bad faith and to the material detriment of the
Company or its subsidiaries, parent company or affiliates;
(2) Cloward refuses or fails to act in accordance with any lawful
direction or order of the Board if such failures or refusals,
individually or in the aggregate, are, in the reasonable and in good
faith opinion of the Board, material to Cloward's performance;
(3) Cloward commits any material act of dishonesty or a felony affecting
the Company, its subsidiaries, parent company or affiliates;
(4) Cloward has a chemical dependency which interferes with the
performance of her executive duties and responsibilities;
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(5) Cloward commits gross misconduct or neglect, or, in the reasonable
and good faith opinion of the Board, demonstrates incompetence in the
management of the legal affairs of the Company or its subsidiaries,
parent company or affiliates;
(6) Cloward is convicted of a felony or any crime involving moral
turpitude, fraud or misrepresentation; or
(7) Cloward materially breaches any term of this Agreement upon 30 days
written notice by the Company.
E. By the Company Without Cause: The Employment Period may be terminated
without Cause by the Company but only upon written notice.
F. By Cloward for Good Reason: Cloward may terminate this Agreement for
"Good Reason" upon 30 days written notice if the Company requires Cloward
to relocate outside the Seattle area or substantially changes Cloward
duties or working conditions.
7. Duties:
Cloward shall be responsible for managing all aspects of Information Quest,
Inc. and providing service to customers of IQ Pager and any other duties as
assigned by the CEO of WCFC.
8. Secrecy:
Cloward shall not divulge any proprietary information relating to the Company
or its subsidiaries, parent company or affiliates, which Cloward may have
acquired during his employment except as necessary in the performance of his
duties with the Company.
9. Disputes:
Any dispute between the parties arising out of this Agreement which cannot be
amicably settled shall be referred to arbitration upon written notice by
either party to the other. The arbitration shall be in accordance with the
International Chamber of Commerce. Said arbitration to occur in Seattle,
Washington. Any award rendered in arbitration shall be binding and
conclusive upon the parties and shall not be subject to appeals or retrying
by the court.
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10. Attorney Fees:
In the event this Agreement is placed in the hands of an attorney due to a
default in the payment or performance of any of its terms, the defaulting
party shall pay, immediately upon demand, the other party's reasonable
attorney fees, collection costs, costs of either litigation, mediation, or
arbitration (whichever is appropriate), whether or not a suit or action is
filed, and any other fees or expenses reasonably incurred by the
non-defaulting party.
11. Jurisdiction:
This Agreement shall be governed by the laws of Washington.
12. FINAL AGREEMENT:
This Agreement is the entire, final and complete agreement of the parties and
supersedes all written and oral agreements heretofore made or existing by
and between the parties or their representatives.
Executed in duplicate this 23rd day of March, 1998.
WADE COOK FINANCIAL CORPORATION
By: /s/ WADE B. COOK
---------------------------------
Name: Wade B. Cook
Title: chairman and Chief Executive Officer
Date:
/s/ THOMAS E. CLOWARD
---------------------------------
Name: Thomas E. Cloward
Date: March 20, 1998
<PAGE>
Product Agreement
1. Parties:
This Agreement is between Thomas Cloward, a Washington resident (Cloward),
Information Quest, Inc., a Nevada corporation ("IQI") and Wade Cook Financial
Corporation, a Nevada corporation ("WCFC").
Whereas, Cloward has previously licensed exclusive, fully paid-up rights
to make, use and sell the IQ Pager which was developed by Cloward for a five
(5%) percent gross royalty.
Whereas, the parties wish to void the previous license arrangement
between IQI and Cloward and replace it with this agreement subject to the
terms and conditions contained herein.
2. Term:
This Agreement shall take effect on April 1, 1998 and remain in effect
through the life of WCFC and/or its successors, or as mutually agreed between
the parties.
3. License:
Cloward hereby licenses rights in the Cloward IP, which Cloward or IQI either
owns or controls, to WCFC for the purpose of marketing and selling the IQ
Pager developed by Cloward. This license shall extend to any and all
marketing materials. This license shall be an exclusive world-wide license. A
list of current Products to which WCFC currently has the rights under the
terms of this Agreement is attached as "Exhibit A." Additional works owned or
controlled by Cloward or IQI shall be licensed to WCFC under the terms of
this Agreement by a signed and dated addendum by the licensor of the
intellectual property (Cloward) and by the licensee WCFC or its subsidiaries,
parent company, or affiliates in order to be effective. The term of each
additional license shall be for the remainder of the term of this Agreement
unless otherwise specified in writing.
4. Royalties:
WCFC shall pay to Cloward a royalty of two and one half percent (2-1/2%)
of all WCFC's gross revenue for Products licensed hereunder. Royalties shall
be paid quarterly based on WCFC Accounting Departments standard payment
schedule.
<PAGE>
5. Marketing and Promotion:
WCFC shall have the right to promote and advertise Products as it deems
appropriate.
6. Author's Warranty
Cloward represents and warrants to WCFC that the work is original and that he
is the sole proprietor thereof, and has full power to enter into this
Agreement. Cloward and IQI warrants that they own all rights in the Products
listed in Exhibit A. Cloward and IQI agrees to indemnify and hold harmless
WCFC and its subsidiaries, representatives, or agents against any damage or
judgment, including court costs and attorney's fees, which may be sustained
or recovered against WCFC, its subsidiaries, representatives, or agents by
reason of the sale of the Products or arising from anything contained
therein. Cloward and IQI also agree to reimburse WCFC and its subsidiaries,
representatives, or agents for all expenses, including court costs,
attorneys' fees, and amounts paid in settlement, sustained by, or in
resisting any claim, demand, suit, action or proceeding asserted or
instituted against WCFC, its subsidiaries, representatives, or agents based
upon the sale of the Product or by reason of anything contained therein.
7. Right to Use Likeness:
IQI hereby consents to the use of its name, trademarks and trade symbols, for
the purposes of fulfilling this Agreement and in connection with the
promotion, advertising, distribution, financing, marketing and production of
the Products or derivatives therefrom, and for general organizational
promotional purposes.
8. Examination of Books:
WCFC shall make available to Cloward, within 30 days written notice, at its
headquarters, the financial books related to payment of royalties hereunder.
9. Disputes:
Any dispute between the parties arising out of this Agreement which cannot be
amicably settled shall be referred to arbitration upon written notice by
either party to the other. The arbitration shall be governed by the laws of
the State of Washington. Said arbitration is to be held in Seattle,
Washington. Any award rendered in arbitration shall be binding and conclusive
upon the parties and shall not be subject to appeals or retrying by the court.
<PAGE>
10. Attorney Fees:
In the event this Agreement is placed in the hands of an attorney due to a
default in the payment or performance of any of its terms, the defaulting
party shall pay, immediately upon demand, the other party's reasonable
attorney fees, collection costs, costs of either litigation, mediation, or
arbitration (whichever is appropriate), whether or not a suit or action is
filed, and any other fees or expenses reasonably incurred by the
non-defaulting party.
11. Jurisdiction:
This Agreement shall be governed by the laws of Washington.
12. FINAL AGREEMENT:
This Agreement is the entire, final and complete agreement of the parties and
supersedes all written and oral agreements heretofore made or existing by
and between the parties or their representatives.
Executed in duplicate this 23rd day of March, 1998.
WADE COOK FINANCIAL CORPORATION
By: /s/ WADE B. COOK
---------------------------------
Name: Wade B. Cook
Title: chairman and Chief Executive Officer
Date:
/s/ Tom Cloward
---------------------------------
Name: Thomas E. Cloward
Date: March 20, 1998
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WADE COOK FINANCIAL CORPORATION
By: /s/ Wade B. Cook
-------------------------------------
Name: Wade B. Cook
Its: Chairman and Chief Executive Officer